This Week in Utilities: Privatization Possibilities and the Most Powerful Wind Turbine Yet


Earnings announcements aside, utilities (and their dividend stocks) have been on the move in May. From privatization potential to paying customers to not use electricity, corporations have been busy thinking up new strategies to keep costs competitive. Here's what you need to know.

35,000 MW up for grabs?
After almost 100 years of service, the government-owned Tennessee Valley Authority may be up for partial or full privatization. According to a new report from the Energy Information Administration, the 35,000 MW power company isn't living up to federal budgetary standards. TVA's $25 billion in current debt is just $5 billion away from an indebtedness cap, which doesn't bode well for its expected $25 billion in capex over the next decade.

If TVA were to downsize or head to the market, there'd be up to 56 power plants up for grabs, including a 3,300 MW Alabama nuclear station and a 2,500 MW Tennessee coal facility.

Dominion's downsize
announced this week that it has shut down its 556 MW Wisconsin nuclear station after nearly 40 years of service. According to Dominion Nuclear President David Heacock, "This decision was based purely on economics" and was due primarily to a lack of scale and inopportune timing for purchase agreement renewals.

Although the decision was first announced last fall, it seems that decreasing demand is causing many utilities to consider exactly how much electricity they need. Duke Energy announced last week that it has suspended plans for new nuclear units at a North Carolina site, in spite of increasing cost competitiveness for nuclear generation.

PPL pilots new energy reduction program
Across the pond, PPL's British utility Western Power Distribution is tryingto get its commercial customers to cut consumption. The company announced this week that it will be offering 15 businesses financial incentives to reduce their overall electricity use and/or shift use to non-peak hours. While reduced demand might seem backwards for any business model, an electricity use reduction would allow PPL to forgo costly upgrades to its current electricity system. And, as the utility's energy efficiency project manager points out, carbon emission targets provide an additional reason to increase efficiencies where possible.

GE puts wind in NextEra's sales
But efficiencies don't have to come from decreased generation (a la Dominion) or decreased consumption (a la PPL). General Electric unveiled its largest, most efficient wind turbine to date this week -- and NextEra nabbed 59 for its new wind farm. NextEra is the largest renewable-energy producer in the country, and these newest purchases will add around 100 MW to its current 10,000 net MW of wind capacity.

With an 80-meter height and 100-meter blades, the new turbines are rated to 1.7 MW each, 6% more than GE's previous best. The turbines use streaming data to make the most of each breeze and, according to GE's general manager for wind projects, offer "consistent performance, reliability, and efficiency."

Stay current on electricity
The world of utilities is changing fast, and dividend stocks aren't the stable stalwarts they once were. Be sure to check back weekly for the latest on your portfolio's moves, and you'll be well on your way to electrifying earnings.

As the nation moves increasingly toward clean energy, Exelon is perfectly positioned to capitalize on having the largest nuclear fleet in North America. This strength, combined with an increased focus on balance sheet health and its recent merger with Constellation, places Exelon and its resized dividend on a short list of the top utilities. To determine whether Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply click here now for instant access.

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Fool contributor Justin Loiseau owns shares of General Electric. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool recommends Dominion Resources and Exelon and owns shares of General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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